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ETF Specialist

A Rough Year for Natural Gas Attracts the Bottom-Pickers

It may be tempting to try to catch a rebound, but know what you're getting into first.

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With the price of natural gas hitting three-year lows last week, some traders have started trying to bottom-pick. As a result, prices have come off their recent lows as buyers step in and drive prices higher. Those expecting a near-term rebound may be considering  United States Natural Gas (UNG), the oldest and largest futures-based product, as a potential option. With the winter heating season right around the corner, the fund--which has roughly $650 million in assets--has already seen about $100 million in net new assets flood in since Oct. 1, 2015, when prices touched three-year lows.

Given the interest that natural gas has garnered during the past week or so, we thought it would be a good time to spotlight UNG. It is true that the exchange-traded fund offers a cheap and accessible way to speculate on movements in short-term natural gas prices. But, there are important caveats to consider before investing.

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John Gabriel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.